Statutory charge under industrial development law recognised as security, unaffected by non-registration or insolvency override.

A statutory charge created by Section 13A of the Uttar Pradesh Industrial Area Development Act, 1976 over amounts payable to the development authority was treated as security by operation of law, making the authority a secured creditor under the insolvency framework. The charge attached to pre-CIRP lease rental dues once they became payable, and the later insertion of Section 13A did not affect outstanding liabilities already due. Non-registration of the charge under the Companies Act was immaterial because the security arose from statute, not a consensual instrument. Absence of recovery notices also did not negate the charge, and no inconsistency was found with Section 238 of the Insolvency and Bankruptcy Code.

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Issues: (i) Whether the amount payable to the Greater Noida Industrial Development Authority constituted a statutory charge over the corporate debtor's assets and made it a secured creditor under the insolvency framework. (ii) Whether non-registration of the charge under the Companies Act and the absence of recovery notices defeated the Authority's secured status or brought the matter within the overriding effect of the Insolvency and Bankruptcy Code.

Issue (i): Whether the amount payable to the Greater Noida Industrial Development Authority constituted a statutory charge over the corporate debtor's assets and made it a secured creditor under the insolvency framework.

Analysis: Section 13A of the Uttar Pradesh Industrial Area Development Act, 1976 provides that any amount payable to the Authority under Section 13 constitutes a charge over the property. The admitted default in payment of lease rentals, which arose before commencement of the corporate insolvency process, therefore created a charge by operation of law. The statutory charge was sufficient to place the Authority in the category of secured creditor within the meaning of the insolvency code. The later insertion of Section 13A did not dilute the charge in respect of dues already payable and outstanding.

Conclusion: Yes. The Authority was correctly treated as a secured creditor on account of the statutory charge.

Issue (ii): Whether non-registration of the charge under the Companies Act and the absence of recovery notices defeated the Authority's secured status or brought the matter within the overriding effect of the Insolvency and Bankruptcy Code.

Analysis: The charge in the present case arose directly from the statute and not from a consensual security instrument requiring registration under the Companies Act. For that reason, non-registration of charge with the Registrar of Companies was held to be inconsequential. The contention based on absence of recovery notices was also rejected because the statutory charge attached once the amount became payable. The provisions of Sections 13 and 13A of the 1976 Act were found to operate harmoniously with the insolvency code, and Section 238 of the Insolvency and Bankruptcy Code, 2016 was held not to displace the statutory charge.

Conclusion: No. Non-registration and absence of recovery notices did not negate the secured status, and no inconsistency with the insolvency code was found.

Final Conclusion: The statutory charge in favour of the Authority was upheld, the challenge to its secured status failed, and the impugned orders were left undisturbed.

Ratio Decidendi: A statutory charge created by a special enactment over dues payable to a development authority constitutes security by operation of law and is not defeated by non-registration under the Companies Act or by the moratorium provisions of the Insolvency and Bankruptcy Code where no real conflict exists.

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